Gold Price Forecast: XAU/USD downside appears difficult even as US NFP favors Fed hawks

  • Gold Price remains pressured towards short-term key support after snapping three-week downtrend with minor gains.
  • XAU/USD bears cheer upbeat United States Nonfarm Payrolls favoring Federal Reserve hawks but employment details aren’t too impressive.
  • US policymakers’ ability to avoid the ‘catastrophic’ default, absence of Fed talks ahead of FOCM may tease Gold buyers.
  • China inflation, second-tier data may entertain XAU/USD traders amid a likely less volatile week.

Gold Price (XAU/USD) bears the burden of fresh hawkish Federal Reserve (Fed) calls, especially after the strong United States Nonfarm Payrolls (NFP), as it slides below $1,950 amid early Monday morning in Asia. In doing so, the yellow metal holds onto the post-NFP losses despite posting the first weekly gain in four. That said, the pre-Fed blackout of policymakers may restrict the XAU/USD moves during the week while US ISM Services PMI and China inflation numbers may direct the Gold Price moves.

Gold Price lures buyers despite strong Nonfarm Payrolls

Gold Price marked the biggest daily slump in a month after the United States Nonfarm Payrolls (NFP) surprises markets with a strong number and bolstered the Federal Reserve (Fed). Even so, the XAU/USD snapped a three-week downtrend as market sentiment remains slightly positive. The reason could be linked to the mixed details of the US employment report for May.

On Friday, the US jobs report for May surprised markets with a jump in the headline Nonfarm Payrolls (NFP) by 339K versus 190K expected and 294K prior (revised). It’s worth noting, however, that the Unemployment Rate also rose to 3.7% from 3.4% prior, versus 3.5% market forecasts. It should be noted, that the Average Hourly Earnings eased whereas the Labor Force Participation Rate remain the same as previous.

It’s worth noting that the latest tension between the US and China, especially due to the Taiwan concerns, however, joins the likeliness of 25 basis points (bps) of the Federal Reserve (Fed) in June to exert downside pressure on the Gold Price.

United States policymakers’ ability to avoid default, no Fed talks can favor XAU/USD bulls

While the United States labor market report defends downside bias for the Gold Price, the policymakers’ ability to avoid the ‘catastrophic’ default keeps the metal buyers hopeful, especially amid the downside US Dollar and Treasury bond yields.

After the US House of Representatives and Senate passes the debt-ceiling bill, the key agreement reached US President Joe Biden’s desk for signing and became the law before the June 05 deadline, avoiding the ‘catastrophic’ default. It should be noted, however, that the global rating agencies remain cautious despite the price-positive move. “Fitch Ratings said on Friday the United States' "AAA" credit rating would remain on negative watch, despite the agreement that will allow the government to meet its obligations,” said Reuters.

Amid these plays, the United States Treasury bond yields and the US Dollar marked the first weekly loss in four while Wall Street closed on the positive side, which in turn keeps the riskier assets and the Gold Price on the buyer’s radar.

Looking forward, the Gold Price may witness hardships in extending the previous day’s losses as a lack of major data/events, as well as the cautious optimism in the market, may allow the XAU/USD to pare previous losses. That said, United States Factory Orders and ISM Services PMI may entertain the intraday Gold traders while China inflation and risk catalysts should be eyed afterward for clear directions.

Gold Price technical analysis

Gold Price has a bumpy road to travel towards the south despite reversing from a 12-day-old horizontal resistance, around $1,985-87.

The reason could be linked to the below 50.0 levels of the Relative Strength Index (RSI) line, placed at 14, as well as an 11-week horizontal support zone near $1,937-32 that also comprises the previous resistance line stretched from early May.

Even if the XAU/USD breaks the aforementioned horizontal support zone, the 61.8% Fibonacci retracement level of its March-May upside, near $1,913, will precede the $1,900 round figure and the mid-March swing low of around $1,884 to challenge the Gold bears.

On the contrary, the Gold Price upside beyond the aforementioned horizontal resistance area surrounding $1,985-87 isn’t an open invitation to the buyers as the 200-bar SMA level of around $1,990 and the $2,000 psychological magnet can restrict the bullion’s north-run.

In a case where the XAU/USD remains firmer past $2,000, multiple hurdles near $,2010 and $2,050 can act as the last defenses of the bears.

Overall, Gold prices appear to have limited downside room and can lure the short-term recovery.

Gold Price: Four-hour chart

Trend: Limited downside expected

additional important levels

Today last price 1949.92
Today Daily Change 1.90
Today Daily Change % 0.10%
Today daily open 1948.02
Daily SMA20 1980.91
Daily SMA50 1991.4
Daily SMA100 1939.1
Daily SMA200 1835.68
Previous Daily High 1983.5
Previous Daily Low 1947.56
Previous Weekly High 1983.5
Previous Weekly Low 1932.12
Previous Monthly High 2079.76
Previous Monthly Low 1932.12
Daily Fibonacci 38.2% 1961.29
Daily Fibonacci 61.8% 1969.77
Daily Pivot Point S1 1935.89
Daily Pivot Point S2 1923.75
Daily Pivot Point S3 1899.95
Daily Pivot Point R1 1971.83
Daily Pivot Point R2 1995.63
Daily Pivot Point R3 2007.77



Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content

Editors’ Picks

EUR/USD recovers modestly from 2023-low, trades below 1.0500

EUR/USD recovers modestly from 2023-low, trades below 1.0500

EUR/USD dropped to a fresh 2023-low near 1.0450 on Tuesday before staging a modest rebound. After the data from the US showed that the number of job openings rose unexpectedly in August, the US Dollar extended its rally and caused the pair to turn south in the American session.


GBP/USD holds above 1.2050 after US data

GBP/USD holds above 1.2050 after US data

GBP/USD fell sharply to the 1.2050 area with the immediate reaction to the US job openings data but managed to its losses. As safe-haven flows continue to dominate the financial markets, however, the pair finds it difficult to gather recovery momentum.


Gold moves closer to $1,800 amid risk-off flows Premium

Gold moves closer to $1,800 amid risk-off flows

Gold price stays under modest bearish pressure and trades below $1,830 in the second half of the day on Tuesday. The benchmark 10-year US Treasury bond yield holds at fresh multi-year highs above 4.7% after upbeat US data, not allowing XAU/USD to gain traction.

Gold News

Chainlink price still trapped in range despite exhausted macro downtrend

Chainlink price still trapped in range despite exhausted macro downtrend

Chainlink price eyes the upper boundary of a range at $8.148. It comes after the macro downtrend concluded, and could be the path to a new confirmed macro uptrend for LINK.

Read more

S&P 500 Forecast: 4,300 becomes resistance for lagging index

S&P 500 Forecast: 4,300 becomes resistance for lagging index

S&P 500 lost 0.74% last week, its fourth consecutive losing streak. Equity index stayed uncertain and closed flat on Monday. Tuesday begins with index shedding ground once more as 4,300 turns into resistance.

Read more